US Dow Jones Industrial Average (DJI) – Up trend expected to be weak

In my article last month I mentioned that the DJI has more potential upside if the DJI breaks and stay above the resistance level at 8,600 points. The DJI did break above this level in the early of June but failed to stay above it after two weeks. The DJI went as high as 8,877,93 points before making its way down to close at 8,438.39 points end June. There were no positive catalysts to boost the market further upwards as compared to the month of May. The DJI is currently being supported at 8,200 points.


Weekly DJI chart with volume as at 26 June 2009 using NextVIEW Advisor Professional

The US market’s performance was not as strong as the performances of markets in the Asian region. So far, the DJI has climbed 29% from the low in March where most markets in the Asian region climbed more than 50%. Most markets are already at the 38.2% Fibonacci retracement level while the DJI has only broken above the 23.6% Fibonacci retracement level. The bearish divergences of indicators against the DJI suggest strong resistance and therefore the momentum of the uptrend is expected to be weak. The DJI may test the 8,600 points resistance level again but may not be able to stay above it. If it does, it may test the next resistance level at 9,400 points. Current support level remains at 7,900 points.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.